Among the various effects the pandemic has had on the economy, a sharp drop in mortgage rates may mean homeowners can benefit.

Mortgage broker Mitchell Bryce with The Mortgage Group says that 74 % of Canadian homeowners have a fixed rate mortgage term. There may be benefits in breaking the current mortgage term as long as the homeowner is aware of and ready to assume the penalties. With mortgage rates being offered as low as 1.640 for a 5-year-fixed term in certain scenarios, Mitchell says even with penalties, homeowners could save up to tens of thousand of dollars over the life of a mortgage.

“It is critical to have a mortgage broker or associate help you determine if it is worthwhile to proceed with renewing your mortgage early. In a lot of scenarios, the amount of interest you will save in the long run far outweighs the amount of the penalty you have to pay upfront. On top of that, you can typically build in up to $3,000.00 of the penalty, back into your mortgage.”

This helps alleviate and, in some scenarios, eliminate the need to worry about dipping into your bank account to cover those upfront penalty costs, Bryce states.

Bryce suggests that if  you are in a mortgage term that holds a higher interest rate then 2.44% it is in your best interest to at the very minimum explore the idea of renewing your mortgage into a more competitive product.